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Poverty is often thought of as economic privation — a lack of resources such as food, shelter, clothing, and financial assets that contribute to material deprivation — but poverty can also be understood as a ”diminished capacity” to engage in society — social relationships, cultural traditions, politics, the labor and consumer markets — which can lead to social dislocation, exclusion, and alienation. As an aspect of social stratification and unequal social relationships, poverty represents a fundamental inequality in the distribution of resources, opportunity, and exposure to risk; and the risk of being poor is not equal across groups. Income is stratified by race, ethnicity, and gender, making poverty most prevalent among those groups who are already socially disadvantaged.

Research consistently finds that poverty exposes individuals to a host of physical and psychological problems that have enduring effects on their life chances. The poor experience higher rates of mortality and poorer health as a result of stress, poor nutrition, hazardous jobs, limited access to health care, and low-quality housing; individuals report feelings of stress, powerlessness and shame at their inability to provide for themselves and the need to rely on others. Children raised in poverty experience an increased risk of lower educational/ occupational attainment and higher rates of high school dropout, early sexual initiation, drug experimentation, and poverty, as adults.

As poverty is multi-dimensional, it can be measured in many ways; income poverty is most commonly measured by comparing household income to an absolute or relative measure of poverty. Absolute measures define a fixed threshold below which people are considered deprived; for example, the World Bank uses a threshold of $1 or $2 a day (for a family of three) to estimate poverty in much of the developing world. However, what it means to be poor varies over time and by location; therefore poverty thresholds used in developing areas do not meaningfully describe poverty in more developed areas. The US poverty standard, adopted in 1965, provides a longstanding gauge of absolute poverty in the USA; while it is updated yearly to reflect inflation, some researchers argue that the poverty standard has fallen out of step with what it means to be poor as costs and trends in consumption have changed over time.

Whereas absolute measures illustrate social stratification, relative measures highlight income inequality. Used widely in Europe, relative thresholds measure poverty as percentage of median income, e.g. 50 percent. Relative measures move in step with economic trends and reflect changes in the standard of living; however, defining poverty as a measure of relative disadvantage, there will always be a segment of the population that is considered poor, regardless of actual levels of wealth.

When compared cross-nationally, the USA has high rates of both absolute and relative poverty, signaling a wide income disparity and real income inadequacy. Three factors, demographic changes, economic activity, and government transfers contribute to the size of the poverty population. The number of single-mother (often minority) families has grown significantly since the 1960s and they have disproportionately high rates of poverty, leading to a so-called ”feminization of poverty.” While demographic changes have contributed to the widening income disparity, low wages and limited public benefits largely account for the size of the low-income population. The USA favors a market-based approach to poverty reduction in which policies enable individuals to ”earn” their way out of poverty rather than to redistribute income, per se. The central ethos of a capitalist market is to maximize profits and minimize wages, so employment alone may not provide sufficient resources for low-wage workers to escape poverty; in Scandinavian countries, strong safety net policies are effective in bridging the gap between earned income and the poverty line.

The failure of the economic prosperity of the 1990s to dramatically reduce poverty has reinvigorated cultural theories of poverty that argue that there is an ”underclass” culture which eschews mainstream values, and transmits poverty intergenerationally through the reliance on government support, reduced labor force participation, and single-mother households. While cultural theories focus on individual behavior, other models assert the importance of structural factors and societal stratification, such as discrimination, segregation, and the availability of jobs in limiting opportunities to escape poverty.

According to the World Bank (2001), there are five keys to reducing poverty: promoting opportunity by stimulating economic growth; making the market work for poor people; enabling poor people to build assets; making state and social institutions more responsive to poor people; protecting people against the shock of economic crises, natural disasters, war, and illness.


  1. World Bank (2001) World Development Report 2000/ 2001: Attacking Poverty. Oxford University Press, Oxford.
  2. Danizer, S. & Haveman, R. (2001) Understanding Poverty. Harvard University Press, Cambridge, MA.
  3. Iceland, J. (2003) Poverty in America. University of California Press, Berkeley, CA.
  4. Sen, A. (1999) Development as Freedom. Alfred A. Knopf, New York.

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